Earlier in August, EU authorities sent out questionnaires to the groups involved with the Libra project, stating that the Commission is investigating whether the new digital currency project would unfairly shut out rivals. The questionnaire is a standard part of a preliminary information-gathering investigation.
The regulators have stated that they have concerns over Libra’s potential to create competition restrictions on the information that will be shared and the use of consumer data. Data-protection supervisors are concerned about how Libra will share information. In a statement earlier this month, they said that Facebook had the potential to combine personal data with financial data and the Libra cryptocurrency, causing privacy concerns about the network’s structure and data-sharing arrangements.
According to the EU questionnaire, regulators are also probing into the possible integration of Libra-backed applications into Facebook’s messaging services such as WhatsApp and Messenger. It mentioned that the investigation focuses on the governance structure and membership of the Libra Association, the organization managing Libra cryptocurrency.
The Commission’s financial services department have reported that apart from the antitrust scrutiny, other EU regulators are busy monitoring market developments in the field of crypto assets and payment services, including Libra.
Both the Commission and Facebook have declined to comment on the matter.
Major Regulatory Scrutiny of the Libra Cryptocurrency
The Libra digital currency is a challenge for the financial regulators as they have never dealt with a global currency that they can neither control nor manage. Since Facebook and its 27 partners revealed the plan to launch the Libra cryptocurrency two months ago, the social networking company has been receiving a negative reaction from US lawmakers who fear that the cryptocurrency can potentially be abused by criminals.
Facebook has already promised to only launch the cryptocurrency after addressing all the concerns of lawmakers, which is something that would take time.
EU policymakers have already been giving a hard time to Facebook for past two years over data privacy breaches such as the Cambridge Analytica scandal, the spread of online disinformation, electoral interference and terrorist content.
However, Facebook is not the only tech giant facing antitrust scrutiny from EU regulators. In July, EU regulators announced they were investigating whether Amazon violated the competition law with the use of data from independent retailers.